Business Ethics and Internal Social Criticism

The purpose of this paper is to present an understanding of business ethics based on a theory of intemal social criticism. Internal social criticism focuses on how members of a business organization debate the meanings of their shared traditions for the purpose of locating and correcting hypocrisy. Organizations have thick moral cultures that allow them to be self-governing moral communities. By considering organizations as interpretive moral communities, I challenge the conventional notion that moral criticism is based primarily on exogenous moral principles delivered by outside critics. I describe an interpretive process of business ethics and develop a theoretical model of internal social criticism. I also propose that organizational identification serves as a mechanism for inducing ethical behavior. I conclude by calling for more research that understands the development and use of existing moral principles inside of organizations. The purpose of this paper is to present an understanding of business ethics based on a theory of intemal social criticism. According to this theory, members of a business organization act as intemal social critics when they evaluate and regulate their practices by appealing to shared understandings about the purpose and nature of their business organization. Intemal social criticism (ISC) focuses our attention on the "thick" moral standards that develop within business organizations.' By thick moral standards, I refer to the principles of morality embedded in specific business organizations that develop from actual conversations, experiences and interactions. Thick standards are concrete and particular, and reflect a business organization's unique set of social goods, practices, and norms. Thin morahty, on the other hand, refers to (near) universal standards of morality—the minimal requirements that those outside of a particular business organization require of that organization. Moral criticism can be thought of as falling on a continuum ranging from thinner to thicker standards of morality. As members of political institutions, we can judge business organizations according to thinner, more universal standards generated outside of any particular business organization. For example, we can invoke thin principles such as "meaningful work is work that is freely entered into," (Bowie 1998) or that multinationals should refrain from coercing workers (Amold and Bowie 2003). Often, but not always, thin standards become institutionalized in the law, allowing us to © 2005. Business Ethics Quarterly, Volume 15, Issue 3. ISSN 1052-150X. pp. 475-498 476 BUSINESS ETfflCS QUARTERLY regulate how business organizations behave. Instead of focusing on thin standards, however, intemal social criticism emphasizes thicker moral standards intimated by a business organization's shared traditions. Organizational members judge and hold themselves to the very standards they help create. By placing my theoretical stake closer to a thicker view of morality, I am not suggesting that thinner criticism is unimportant. My contention is that there already are many important accounts of thin moralities, such as Bowie's work on Kant (Amold and Bowie 2003; Bowie 1998), Donaldson and Dunfee's hypemorms (Donaldson and Dunfee 1999), and stockholder and normative stakeholder theory (Hasnas 1998)—just to name a few. There are fewer accounts of how business organizations develop and use thick standards of morality that reflect their own history and culture.^ This paper makes three contributions to the business ethics literature. First, it provides an altemative to approaches that focus on the application of thin moral principles to business problems. I build off of Michael Walzer's theory of social criticism and argue that organizational members can use principles of morality within their business communities to practice moral criticism. ISC emphasizes discussions among organizational members geared toward unearthing thick moral principles and any contradictions between those principles and practices. Second, I propose that organizational identification serves as a mechanism for inducing ethical behavior. When members engage in ISC, they invoke moral standards that are constitutive of their identities, as opposed to a set of abstract principles. I describe cognitive, behavioral and affective links to ethical behavior. Third, I propose that the field of business ethics should focus less on discovering and inventing moral principles. Instead, I call for a greater emphasis on sociological, anthropological and psychological approaches to understanding the already existing thick standards inside of many business organizations. The flow of this paper goes as follows: I start with an example of intemal social criticism in order to motivate my explication of the theoretical model. A brief discussion of Michael Walzer's (1981; 1983; 1987; 1988; 1994) political philosophy should help to place my argument within the philosophical tradition out of which my model originates. I next present a typology of moral critics before introducing a theoretical model for ISC and explaining its four integral components. Afterward, I discuss organizational identification as a mechanism for generating ethical behavior and the multi-layered nature of social criticism. I then specify some important boundary conditions and assumptions for ISC, before concluding with the implications of this paper. An Initial Example of Intemal Social Criticism Before delving into the more intricate details of ISC, it is worth discussing a brief example. Consider Johnson & Johnson's Credo and how the organization used it in order to respond to the 1982 Tylenol scare. The company faced a crisis when seven deaths were traced to tampered Tylenol medication laced with cyanide (Smith and Tedlow 1989a, 1989b). This case is frequently used as an example in business ethics research because its demonstrates how an organization acted in a socially responsible manner by adhering to its values. For my purposes, I invoke this example to illustrate BUSINESS ETHICS AND INTERNAL SOCIAL CRITICISM 477 a framework of intemal social criticism that generalizes beyond this particular case. More specifically, in describing this example, I will focus on three key components of intemal social criticism: (1) the use of intemal criteria, (2) the interpretive application of those criteria by organizational members, and (3) the avoidance of hypocrisy (or promotion of ethical consistency). The first important point about the Tylenol example concems the organization's use of intemal standards. In 1943, Johnson & Johnson first published the Credo, a one page statement that contained a broad set of values that the organization embodies. Since 1943, managers at the company have updated the Credo to incorporate new shared understandings, such as a recognition of the importance of the environment (Johnson & Johnson 2003b). One of the most significant revisions to the Credo took place in 1975 when Johnson & Johnson's president at the time, James Burke, inquired about the document's relevance to top management. As a result of discussions among management, a revised Credo emerged and the organization reaffirmed its commitment to the values embodied in the Credo (Smith and Tedlow 1989a, 1989b). When members interpret the Credo, they give meaning to the broad set of values contained within the document. Employees at the company examined the Credo during the Tylenol poisonings and determined the concrete meaning of the organization's shared understandings. To arrive at an ethical decision, employees did not focus on general principles of safety or consumer protection—though these are important, too. One approach to business ethics would instruct Johnson & Johnson employees to consider, say, what obligations the Categorical Imperative or a utilitarian calculus would demand of them for resolving the Tylenol poisoning incident. These ethical frameworks may have resulted in a solution similar to the one reached by Johnson & Johnson. Or outsiders might apply the Categorical Imperative to make judgments about the moral excellence (or reprehensibility) of how Johnson & Johnson acted. But within the company, organizational members made their own moral judgments, using their own moral principles. They tumed to their Credo, trying to discem what their own intemal standards required of them. No mention of the Categorical Imperative was needed because Johnson & Johnson had a thick moral culture. They referred to statements in the Credo that give primacy to Johnson & Johnson's customers (Smith and Tedlow 1989a): "We believe that our first responsibility is to the doctors, nurses, hospitals, mothers and all others who use our products" (Johnson & Johnson 2003a). Instead of responding to the Tylenol scare by trying out different ethical principles, employees examined the Credo and determined the morally appropriate behavior required by the company's own thick culture: to issue a complete product recall, which the company subsequently ordered. Johnson & Johnson spent an estimated $100 million dollars in its recall of Tylenol, even though the actual risk to customers was minimal (Moore 1982), because the company's shared moral culture demanded it. A final point about the Johnson & Johnson response to the Tylenol scare concems the promotion of ethical consistency. The right response to the Tylenol poisoning was the one that embodied the best understanding of the Credo. Employees attempted to make decisions consistent with their organization's own shared understandings. In fact, Johnson & Johnson built into its Credo a value that encourages employees 478 BUSINESS ETHICS QUARTERLY to provide feedback to senior management about how consistent the organization's behaviors are with the Credo (Johnson & Johnson 2003a). Former Corporate Vice President Lawrence G. Foster notes how Johnson & Johnson uses an employee survey to articulate and communicate shared understandings as well as to identify inconsistencies between shared understandings and practices: "The credo survey is no longer just a report card. It serves as an instmment to increase involvement, productivity, and the communication of values and objectives; to get input into forming strategic plans; and to identify and resolve gaps between our guiding principles and daily actions" (Foster 2000: 5). Walzer's Arguments against Exegenous Moral Standards In the Johnson & Johnson example, organizational members used intemal standards to decide how the company should respond to the Tylenol tampering. But there are other approaches to moral reasoning that do not rely on principles based on an organization's particular culture. More specifically, Michael Walzer describes two techniques, which he labels discovery and invention. In this section, I review Walzer's challenges to discovery and invention approaches to moral philosophy, which he contrasts with interpretive methods such as ISC. According to Walzer, the mark of the discoverer is his ability to leave the "cave" and see the light of day. He "steps back in his mind from his social position . . . wrenches himself loose from his parochial interests and loyalties [and] abandons his own point of view in order to report to us on the existence of. . . any set of objective moral tmths" (Walzer 1987: 5). In other words, the discoverer discards connections to his conmiunity and temporarily leaves his place in society in order to find a true sense of morality. This sense of morality does not come from within the community, but instead comes from the outside—developed from an objective (read: impartial) and universal (read: acultural and ahistorical) perspective. This objective and universal standpoint is akin to what Thomas Nagel (1986: 5) calls "the view from nowhere," a place which "allows us to transcend our particular viewpoint and develop an expanded consciousness that takes in the world more fully." For business ethics, discovery suggests that organizational members step outside of their business organization and attempt to think objectively about which moral principles an organization ought to follow. Examples may include a religious transformation, in which a leader leaves her organization and retums with a newly found set of principles. Altematively, another approach for discovered business ethics involves an outsider discovering a morality for a business organization. The outsider, unsatisfied with an organization's moral code, attempts to show why a business organization ought to follow an entirely different set of moral principles. The inventor, similar to the discoverer, temporarily jettisons a connection to his community in order to present a moral code. However, instead of leaving the community to find a code of morality, the inventor creates a new morality because he thinks that a morality either does not exist or is inadequate. Inventive philosophy usually begins with what Walzer labels a "design of a design procedure" (Walzer 1987: 6), BUSINESS ETHICS AND INTERNAL SOCIAL CRITICISM 479 something like Rawls's original position that creates an ideal choosing situation (Rawls 1971). By tinkering with the assumptions of the choice procedures (e.g., risk and information assumptions, principles of rationality, etc.), inventors create a philosophical framework that purportedly leads to new and just principles of morality. Walzer raises several objections against discovery and invention. First, Walzer thinks that discovered and invented morality is often not as remarkable as its supporters think. For example, in responding to Nagel's discovery that we should not be indifferent to the suffering of other individuals, Walzer writes, "I acknowledge the principle but miss the excitement of revelation. I knew that akeady" (Walzer 1987: 6). According to Walzer, the discoverer's and inventor's principles are often already within communities, waiting to be interpreted. The interesting question is not whether we should or should not be indifferent to the suffering of others. Rather, the interesting question is what it means not to be indifferent to their suffering in our thick moral culture, i.e., what does this principle require of us within a thick culture? Second, Walzer objects to the abstraction required for discovery and invention. More specifically, he thinks that discovery and invention ignore the complex identities of individuals and the actual choices they have made as members of a moral community. According to Walzer, members' choices are embodied in a community's shared understandings. He thinks that jettisoning these understandings for something purportedly discovered or invented overlooks the very features that make up who we are, both individually and communally (Walzer 1987: 21). For example. In Spheres of Justice, Walzer responds to Rawls's formulation of distributive justice by claiming that the meanings of social goods cannot be abstracted from particular communities (Walzer 1983).̂ Rawls's original position calls on hypothetical agents to separate historical and social contexts from arguments about justice. In other words, according to Rawls, the justifications for principles of justice come from our ability to step outside of our identities and our communities. To accomplish this task, Rawls utilizes the veil of ignorance to strip individuals of their unique identities, and asks hypothetical contractors to select impartial principles for allocating social goods (Rawls 1971). Walzer thinks that the idea of completely shedding our identities to articulate a morality is confused, because moralities are based on shared understandings and social practices of actual—and not hypothetical—communities. Members of a community concemed about justice do not ask questions like, "What would rational individuals choose under universalizing conditions of such and such a sort?" but rather ask something along the lines of, "What would individuals like us choose, who are situated as we are, who share a culture and are determined to go on sharing it?" (Walzer 1983: 5) Third, discovery and invention assume that only certain individuals are capable of articulating a morality—those that can leave their communities to find a morality (discoverers) or constmct new moralities (inventors). Instead, Walzer wants to open up moral criticism to all members of a community. The intemal social critic, Walzer (1987: 39) writes, "is one of us," referring to individuals who only achieve authority by making persuasive interpretations of their community's shared understandings versus claiming a special philosophical knowledge (the discoverer) or having a special philosophical ability (the inventor). 480 BUSINESS ETHICS QUARTERLY Fourth, discoveries and inventions, themselves, often require interpretation. To the extent that moral criticism relies on outside principles, these outside principles are usually the start of a moral conversation—and not its endpoint. The invocation of a principle such as "employees have a right to self-determine their career paths" is itself subject to interpretation. Understanding key concepts such as "self-determine" and "career paths" inevitably involve moral conversations among actual community members. Walzer would argue against abstracting the meaning of career paths from a particular context. He would not ask something like: how would rational actors, not cognizant of their place in the organization, understand the idea of "career path"? Instead, he would argue that the meaning of "career path" will differ by organization. To understand the meaning of this term, and its moral implications, real organizational members, situated in specific organizations, must make an interpretation of this term based on their community's shared understandings. My claim is simply this; In the context of business ethics, discovery and invention are not always needed because some business organizations already contain the values and principles necessary for moral self-government. While thin moral criticism is used to judge the adequacy of moral cultures, ISC focuses on how organizational members practice moral criticism every day using their own thick standards. ISC allows us to understand how companies such as Johnson & Johnson serve as self-governing moral communities that practice business ethics by using their own intemal standards. A Typology of Moral Critics Figure One contains a typology of moral critics distinguished by two dimensions. The "location of a critic" classifies a critic as either a member of a focal organization (i.e., the organization subject to criticism) such as an employee, or an outsider such as a consultant or social commentator." The second dimension addresses whether the moral principles that a critic uses are endogenous to a focal organization (i.e., based Figure 1: Typology of Moral Critics Location of a Critic Inside Focal Organization Outside Focal Organization